Checkpoints for Administering Capital Expenditures

by Erich Helfert



The evaluation of capital expenditure projects in terms of financial return or relative desirability is becoming widely recognized as a method of supervising such outlays. It appears that management has a growing awareness of the values to be derived from rigorous factual analysis of such projects.' Uncertainties in decisions involving future expectations, such as the case in capital outlays, are always present. Measuring the return of capital expenditure projects, however, is only one step in a whole series which must be taken to ensure sound control over the spending of capital funds. If it is assumed that it is management's duty to safeguard the investment and to utilize additional opportunities for investment in order to maintain, and preferably to improve, ideally to maximize, the owner's return oil his investment, it is also management's duty to establish and administer the controls that will enable them to delegate the burden of analysis, to make the appropriate decisions, and to follow through on the decisions.

California Management Review

Berkeley-Haas's Premier Management Journal

Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

Learn more
Follow Us